Race for stock market listing due to favorable trend

In the first nine months of 2023 in India Rs. There were 170 IPOs with an average size of Rs 848 crore. It was the highest compared to other markets. The highest amount collected was Rs. 4,000 crore while some IPOs cost Rs. It was less than 100 crores. Besides, more than 25 other companies have filed draft red herring prospectuses, which means more IPOs could come in the second half of the financial year. This activity is mainly motivated by two reasons. The first is a strong secondary market where most sectors trade well. Strong secondary trends and performance create a favorable primary market environment.

Companies want to raise the necessary funds before possible changes in market trends. Another factor appears to be the massive pullback. Problems have been observed in sectors as diverse as small finance banks, jewellery, supply chain management, infrastructure, hospitality industry and biotechnology. Their medium size shows that even medium-sized companies are successful in reaching the market. This could be a sign of improvement in the small and medium enterprises sector, which is very encouraging as that is where most of the jobs are created.

The primary market struggles at times when retail participation is low. Currently this is not the case at all. The retail quota has been oversubscribed during this period. Certainly, retail investors have been investing their savings in stocks for many years. They are also contributing through mutual funds which is also reflected in the constant capital inflows into the equity mutual sector.

This was mostly done through Systematic Investment Plans (SIPs). This also shows that domestic savings are shifting to stocks to some extent. The tightening of IPO issue norms, listing schedule and other measures by the market regulator have had a favorable impact.

On the one hand, there is a positive environment among domestic investors, on the other hand, the attitude of foreign institutional investors has been mixed. However, these investors are demanding from the market regulator that the allocation quota should be increased and the procedures should be simplified so that participation can be increased.

The US central bank's dovish stance has resulted in risk aversion, resulting in several months of net selling. On the domestic front, inflation seems to be easing which is generally a good thing for the market. Apart from the global situation, domestic political developments will also play an important role in determining the market trend in the coming months.

Markets and investors value stability and policy continuity. This will not only help companies raise funds from the market but will also prove positive for economic activities. A growing list of listed companies will also enable wealth managers to allocate funds cost-effectively.